Good decision...............the lease only works for the dealer and manufacturer.

Leasing is one of the those hot topics.

There’s more than few financial “experts” label them a fleeces. Those same experts love to show the math of the sales guy.

There are few case leases work for user .........but very few..........I personally don’t want a never ending $500-$800 per monthly payment with no equity gain.
Even if I trade every 3-4 years.......my vehicle is never out of warranty, trade values always seem competitive which is same as residual value.

The other issue is vehicle condition at turn in.........some companies are very lenient others every item is checked and charged. Like glass, paint, interior stains, tires and brakes ?

 

After reading all these comments, just for fun, I did some quick numbers on lease vrs. buy on my last few cars. In every case, based on my personal situation, the cars would have cost me around $3,000 to $7,000 more to lease than buy. But again, this is based on the average time I keep my vehicles before selling or trading them. YMMV

 

At the risk of beating this subject to death, here is another potential negative for a lease. If the lease payment were based on 12,000 miles/year for 3-years, and the lessee drove only 32,000 miles, that person paid for 4,000 miles he did not use. At 20¢/mile, that’s $800 of wasted money.

While the lower mileage implies that car’s value should now be higher than the residual value, how many people actually buy-out their lease just to sell it? If you use a dealership to buy-out the lease, the dealership will probably charge more than $800 for their involvement. The dealership will not do it for free. And while you can buy-out the lease directly from the lease company, that requires time, effort and money. You must pay for the car with money from savings or from a loan. Then you must invest more time and effort to sell the used car to pay off the loan or to replenish your savings. How many people actually do that? In my experience not many, at least for a mileage difference of less than 4,000 miles.

If the lessee drives fewer miles than the maximum allotment, to some degree the lease value diminishes for the lessee and the dealer captures that marginal profit at the lessee’s expense. If a person purchased the car and traded it after the same 3-years and 32,000 miles, the trade-in value would automatically reflect the lower mileage.

 

This is what happened to a friend of mine in his leased Mercedes. (Don’t cry for him, he can afford it.). They had leased an MB E class for 12K miles. Due to more frequent than expected trips to their Florida condo, they went over the limit and had to pay excess miles at the end. So they took a 15K miles lease next. Guess what? Covid hit, they didn’t drive down to Florida (2600 mile R/T) at all this past year, rather than the 2 or 3 times they usually do, plus nobody went anywhere this year at all. So now they are way under.

Like I said, they have plenty of money, so it is not an affordable question, but it is a poke in the eye.

 

Have no fear. The lease vs buy horse is known to be one of the sturdiest. It's virtually impossible to beat it to death.

 

Hmmm...what kind of oil is best for a leased car?





Please note the smiley...

 

Note, if you lease with Honda Finance, and go from one Acura lease into another, Acura will roll your unused miles into your new lease. Because of COVID, I had 11k miles left on my 2019 TLX that I rolled into a new 2021 RDX lease. Sometimes this perk will allow you to only need a 10k lease instead of 12 or 15 which lowers the monthly payment. Also, Acura will forgive up to 7k miles over the purchased lease mileage so the .25 a mile over doesn't apply as long as you get into another Acura vehicle. The main kicker here is that you HAVE to lease with Honda Finance, not a 3rd party or dealer arranged financing outside of Honda Finance. Sometimes the dealer has "arrangements" with 3rd party leasing companies and they steer your business towards them.

If you want to purchase a leased vehicle, you don't deal with the dealer, you deal with the Financing company as the dealer doesn't own the vehicle. If it's Honda Financing, there's no fees to purchase the vehicle off lease but you do have to pay the taxes on the residual value. Acura front loads their leases so the residual value is high. But, this helps if you want to turn in your current lease early because the value of the vehicle is high, it covers the remaining payments and they aren't rolled into the new lease. The other secret with Honda Finance is that once your lease is up, you don't necessarily have to turn it in, i.e. I have a 36 month lease and it's the 36th month. You can continue to go month to month for up to a year (with Honda Finance) until you are ready to lease or purchase something else.

 

This can be nice is the lessee intends to stay with Acura. Not all do.

 

Good info, jdorio.

Currently leasing a RED 2019 ILX on a 3-year lease, but after test driving the Phantom Violet Pearl TLX, well...it may be an early lease swap way before the 36 months are up..

 

I like that Phantom color. Too bad it's not offered on the A-Spec.

 

Never change the oil.......cuz it’s technically not your car, so who cares ? Just pretend to change the oil with bogus receipts if they ask.😂

 

How many months are you into your lease?

 

As an Economics major with an MBA and someone who is probably way too frugal, I can tell you a lease is not a fleece. Factor taxes in your equations (which many of you have not) and the desirability of new technology and engineering. Now if you're the kind of person that buys a Civic and drives it into the ground for 10 years, then leasing was never for you. In fact, as I stated in my previous post, if you drive too little, too much, or plan on keeping your vehicle for more than 5 years, you should not be leasing. Generally you should not be leasing unless you know what you are doing (what to ask, how to negotiate, etc.).

As someone who has leased for the past 20 years, I do appreciate the varying opinions because the leasing infrastructure requires customers to purchase new and especially pre-owned cars (the 3-year old previously leased cars). If everyone leased, money factors and residuals would be skewed and the transaction imbalance would make leasing too costly.

So in that regard, thank you for thinking that leasing sucks.

 

Forgetting about all other concerns or advantages of leasing for a moment....When you say "Factor taxes in your equations"... I did, and I think your math may be wrong in states that only charge sales tax on the difference between the new vehicle and the trade-in. (CA is not one of those states) I recently traded in a 2 year old RDX on a 2021 car. The RDX was worth around $30,000 so I saved 8.6% of $30,000 ($2,580) by purchasing. If I had leased, I would have lost that tax savings. Right? If I had traded in a 10 year old beater with little value, the lease might have made more sense. That is not going to happen for me. I acknowledge that I am not versed in leasing, and have never leased. I DID seriously consider it on my most recent "acquisition".

 

That is extremely generous of Honda. I suspect Honda still makes more on the new lease than they sacrifice with those unused miles, making it a good business decision for them. But this is good to know.

What is it you factor-in that gives a lease a tax advantage? With a lease, the business can deduct the full lease payment as an expense each year to reduce taxable income. That is certainly convenient. (Of course this point is moot for 99% of Acura owners because they are not a business.)

But if the business buys the car, it can deduct 56¢/mile, also very simple. (That also applies to a lease if the 56¢ creates a larger deduction than the lease payment itself.) Or, a business can deduct 100% of the full purchase cost of that car (for federal tax) in the first year. And in each year of ownership, the business can further deduct all other costs such as gasoline, tolls, any repairs not covered under warranty, oil changes, brakes, tires (if tires cost more than $600, I think they are supposed to be depreciated), car washes, detailing costs, wiper blades, etc. When the car is sold, that sale value must be recaptured as income. But in the end, the business can itemize the same dollar-deduction as the lease. As I understand it, leases have no tax advantage. If you can provide anything specific that supports your statement, I'd really like to learn about it. Thanks.

 

Only 3 months into it. It was the only 2019 on the lot and I'm sure the dealer was licking his chops and thanking his lucky stars someone came and took it away. My wife and I had zero intention of leasing any car that day, but after seeing how cool that RED color was and it was a blast to drive, it became our leased beater...

 

I love RED vehicles! Wish my RDX was RED! OH! I don't own it anymore, It wasn't intended to be a beater. Now I have a RED Corsair!

 

As it happens, my favorite Accord was red.

 

Our ILX A-Spec is not my first red car, and one of my favorites was a brand new red 1980 Honda Civic DX 1500 5-speed 4 banger I bought before I joined the Navy. I think I paid $5K out the door.

Of course, the car was ALL RED exterior and interior. Drove it into the ground with over 200K miles traveling the country and had it transported to Hawaii when I was stationed there for a time, but it was a great car for a sailor.

 

I still miss that red EX MT. My wife made me sell it for a new Accord, but I didn’t really want to. Her logic was impeccable, so I gave in.

It only had about 125K miles, but the AC went out, and it was of the old type for which there were no more recharges available. I would have had to convert the AC system to the new freon, and it just did not make sense to put all that money into an old car.

 

This is true. I live in California and my tax implication is much different than yours. In fact, these are the states that do not give a tax credit on trade-in vehicles:

• California
• District of Columbia
• Hawaii
• Kentucky
• Michigan
• Montana
• Virginia

In the above states, in which I live, if you buy a $45,000 RDX, you'll pay roughly $4500 in tax. If you trade that vehicle in 3 years, you get none of that money back. Zero. However, when you lease, you pay tax only on the monthly payment. So if your monthly payment is $450/mo with a tax of $45/mo, then over three years you'll pay $1,620 in tax (as opposed to $4,500). Now, for those states with the tax credits, I will argue that this credit only applies on trade ins. If you sell your vehicle privately, you will not receive the credit (that's my understanding, correct me if wrong). You're going to take a hit on trade-in value at a dealership as opposed to selling the car privately.

I know this is a Coke/Pepsi debate and you're either on one end of the argument or the other, so just do what best works for your family, for where you currently live, and call it a day.

 

Over at the BMW board, we have done the math several times. Shortly after the third lease, say 6 years and two months after the first lease, had you bought that first lease car, this is where you would be at about 75 months: A paid off car worth several thousand dollars (a 2014 335i with 75K miles has a KBB of $14K-$17K trade in value.). You would pay maintenance of course, but can easily get another 2 years without major service. At that 75 month time you would have paid out the same total dollars that two full leases and starting a third would have cost you. The same Total dollars, and that assumes no lease increase payments for lease 2 or lease 3. The ‘break even’ point comes in the middle of lease two somewhere if you factor in the equity in the car.

It would not be the current model, it would have no driving aids, but it wouldn’t cost you car payments, and a 6 year old or so car is still a good car.


It definitely costs more to lease and re-lease as opposed to buy and hold. OTOH, how long do you buy and hold a nice dinner for two? You pays your money and you takes your choice.

You want to see some real depreciation? Take a Danube River cruise. It definitely costs more than two weeks at the shore.